Scientologists Report Assets of $400 Million

By ROBERT D. HERSHEY Jr.,

Published: October 22, 1993

WASHINGTON, Oct. 21—
The Church of Scientology, the secretive and combative international organization that recently won a decades-long drive for Federal tax exemption, counts assets of about $400 million and appears to take in nearly $300 million a year from counseling fees, book sales, investments and other sources, according to documents filed with the Internal Revenue Service.

The financial disclosures are in documents the church was required to file with the I.R.S. in applying for tax-exempt status, conferred on 30 or more entities of the church on Oct. 10. The documents, 12 linear feet of them in eight cardboard boxes, formed the basis for the I.R.S.'s decision and became a matter of public record when tax exemption was granted.

A review of much of the material this week showed that while the church spends heavily on legal fees, advertising and commissions for fund-raisers -- and is spending $114 million to preserve the writings and tapes of its deceased founder that it calls its scripture -- its top officials are paid salaries comparable to those of the leaders of Protestant denominations. Salary of Top Officials

David Miscavige, who holds the highest ecclesiastical position in Scientology, is listed as being paid $62,683 in 1991. His wife, Michele, was paid $31,359 as his assistant. Although the organization typically pays fund-raisers 10 percent of what they bring in, the Miscaviges did not supplement their pay with commissions, Mark C. Rathbun, president of a major church unit, said in a telephone interview today.

The salaries are used to challenge former members of the group and other critics who assert that Scientology is a sham religion run more as a business for the financial benefit of senior members.

Scientology officials say the church has eight million members, a figure that is disputed by many who have left the church and other critics. They say the church has no more than 700,000 members, and perhaps as few as 50,000.

The filings included three sets of church responses to follow-up queries by the I.R.S., dated April 1991, June 1992 and November 1992. Although the service would not elaborate on what might have tipped its decision to grant tax exemption, the provision of salary data in the final round may well have been a crucial factor.

When asked whether the I.R.S. verified salary or other figures, Frank Keith, a spokesman for the agency, would not comment directly. But he called the salary information provided by the church "sufficient" for determining that "there were no issues of inurement that could have prevented" approval of the exemption. Inurement, or private enrichment, is barred under the tax law governing religious and other charitable organizations. What Religion Is Based On

The exemptions were granted as part of a larger settlement between the Government and the Scientology organizations. The settlement ends dozens of legal disputes that go back to the founding of the church 39 years ago.

The exemptions mean the church and its related educational and counseling groups will no longer have to pay Federal income taxes, saving the organization what some tax lawyers said could be tens of millions of dollars a year.

The files, which include doctrinal material and training manuals as well as financial statements, do not make clear the amount of Scientology's annual income. Revenues of 18 of the 30 groups, including all the major ones, total about $285 million. But Mr. Rathbun said the actual figure was "not anywhere near that." Mr. Rathbun said he could not provide an estimate of his own.

Mr. Rathbun said the figure appeared larger than it was because the church often transferred money among its units and treated maturing certificates of deposits as revenue.

Scientology is based on the research of L. Ron Hubbard, a onetime writer of science fiction who died in 1986. His 500,000 pages of writings and thousands of taped lectures are the sole source of doctrine.

Spiritual salvation, the church teaches, can be achieved only by following the scriptural precepts, including participating in sessions aimed at shedding painful experiences and to raise spiritual awareness. During these sessions, machines called E-meters, which resemble small lie-detectors, are used to measure responses to questions. Big Pay for Fund-Raisers

Although leaders did not appear to make large salaries, some of them had relatives on the church payroll. For example, Mr. Miscavige's father, stepmother, brother and sister-in-law are all employed by the church.

The records showed a half-dozen or more people making hundreds of thousands of dollars a year in fund-raising commissions.

The files showed one of the biggest fund-raisers was Barry Klein, who made $217,694 in 1989, $201,314 in 1990 and $176,582 in a third year that was not specified. Mr. Klein, who is not a church member, was paid a 10 percent commission based on the donations he raised.

Two other big fund-raisers are Ken Pirak, who made $407,052 in 1991, and Steve Grant, who made $339,978 in 1991.

The filings also showed that Scientology units spent $30 million in legal bills during 1987 and 1988, $7 million on bomb-resistant doors for one of three vaults in which Mr. Hubbard's writings are to be stored and $6 million for an advertising campaign.

The church's 440-foot yacht, the Freewinds, is valued at $15.2 million. The yacht is kept in the Caribbean and is used for spiritual retreats by top church officials. The documents also showed that the church owns more than $3.5 million in gold bullion.

Photo: The Church of Scientology appears to take in nearly $300 million a year from counseling fees, book sales, investments and other sources, according to Internal Revenue Service documents. Visitors to a church center at 65 East 82d Street browsed through books in a reception area. (William E. Sauro/The New York Times)